Coty is opening up a new channel for distributing beauty products by acquiring control of online peer-to-peer seller Younique for about $600 million.
According to The Wall Street Journal, Younique is “part of a crop of upstarts that have taken the direct-selling business model pioneered by companies such as Amway and Avon and adapted it to the internet age.”
It employs “presenters” to sell its branded makeup and skincare products directly to consumers through social media. If users buy the products within an allotted time frame, the presenter — often a young mother working from home — receives royalties.
Younique claims to have about 200,00 active presenters and more than 4.1 million customers in 10 countries. Under the terms of the proposed deal, Coty would acquire 60% of the company and siblings Derek Maxfield and Melanie Huscroft, co- founders of Younique, would own the remaining 40%.
“This partnership will combine Younique’s high growth e-commerce platform and social selling direct-to-consumer business model with Coty’s beauty product R&D and innovation know-how, as well as its extensive manufacturing and supply chain capabilities,” Coty said in a news release.
Coty’s brands include CoverGirl makeup and Clairol hair dye. As Reuters reports, the company has been seeking to reduce its dependence on its ailing fragrance business. Younique is expected to generate revenue of about $400 million in 2016.
“Coty is the latest consumer-products maker to scoop up an online upstart, allowing it to sell products directly to customers and sidestep department stores and specialty retailers such as Sephora and Ulta Beauty,” the WSJ said.
Younique was founded in 2012 and sells cosmetics ranging from $19 lipsticks to $39 moisturizers. “Coty and Younique share a passion for beauty, an entrepreneurial spirit, as well as complementary missions,” Maxfield said.
Piper Jaffray analysts Stephanie Wissink and Lauren M. Wolff noted that Younique’s platform was “built specifically for mobile interaction, which has become the preferred shopping method for teens and millennials.”